The board of HomeTrust Bancshares, Inc. (NASDAQ:HTBI) has announced that it will pay a dividend of $0.12 per share on the 27th of February. This payment means the dividend yield will be 1.3%, which is below the average for the industry.

Check out our latest analysis for HomeTrust Bancshares

HomeTrust Bancshares' Earnings Will Easily Cover The Distributions

While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible.

HomeTrust Bancshares has a good history of paying out dividends, with its current track record at 6 years. While past data isn't a guarantee for the future, HomeTrust Bancshares' latest earnings report puts its payout ratio at 22%, showing that the company can pay out its dividends comfortably.

Looking forward, earnings per share is forecast to fall by 7.8% over the next 3 years. Fortunately, analysts forecast the future payout ratio to be 17% over the same time horizon, which is in the range that makes us comfortable with the sustainability of the dividend.

HomeTrust Bancshares Is Still Building Its Track Record

HomeTrust Bancshares' dividend has been pretty stable for a little while now, but we will continue to be cautious until it has been demonstrated for a few more years. Since 2019, the dividend has gone from $0.24 total annually to $0.48. This works out to be a compound annual growth rate (CAGR) of approximately 12% a year over that time. It is always nice to see strong dividend growth, but with such a short payment history we wouldn't be inclined to rely on it until a longer track record can be developed.

The Dividend Looks Likely To Grow

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. HomeTrust Bancshares has impressed us by growing EPS at 13% per year over the past five years. HomeTrust Bancshares definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

We Really Like HomeTrust Bancshares' Dividend

In summary, it is good to see that the dividend is staying consistent, and we don't think there is any reason to suspect this might change over the medium term. The company is generating plenty of cash, and the earnings also quite easily cover the distributions. However, it is worth noting that the earnings are expected to fall over the next year, which may not change the long term outlook, but could affect the dividend payment in the next 12 months. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we've picked out 1 warning sign for HomeTrust Bancshares that investors should know about before committing capital to this stock. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.